Exam 5: Elasticity

Refer to the information provided in Figure 5.3 below to answer the question(s) that follow. Figure 5.3 -Refer to Figure 5.3. Use the midpoint formula. If the price of a gardenburger increases from $6 to $8, the price elasticity of demand equals ________ and demand is ________.

The demand for gasoline is likely to be more inelastic than the demand for sushi.

If government officials are mainly interested in generating tax revenue, then they should tax goods for which demand is price inelastic.

A perfectly price inelastic demand curve will be a ________ line.

When demand is unit elastic, an increase in price will result in an increase in total revenue.

The price elasticity of demand for heart transplants is perfectly inelastic. Thus, the price elasticity demand for heart transplants is

A government wants to reduce electricity consumption by 10%. The price elasticity of demand for electricity is -0.1. The government must ________ the price of electricity by ________.

A tax on a good whose demand is price elastic will be effective in discouraging consumption of that good.

Demand is more elastic for an item for which few substitutes are available.

Refer to the information provided in Figure 5.7 below to answer the question(s) that follow. Figure 5.7 The above figure represents the market for pumpkins both before and after the imposition of an excise tax, which is represented by the shift of the supply curve. -Refer to Figure 5.7. Before the tax, store owners are willing to sell ________ pumpkins at a price of ________ each.

When demand is elastic, a decrease in price will result in an increase in total revenue.

Total revenue increases if price ________ and demand is ________.

Related to the Economics in Practice on page 102: Harriet runs a corner delicatessen and one day decides to raise her prices by 20 percent. Total revenue is likely to ________ when she first raises prices since demand is relatively ________ in the short term.

An increase in demand caused no change in the equilibrium price. Thus, supply must be

When demand is unit elastic, a change in price will result in total revenue falling to zero.

The more ________ the demand is for a product, the ________ tax revenue that will be raised by taxing the product.

If the quantity of bagels demanded decreases by 8% when the price of croissants decreases by 16%, the cross-price elasticity of demand between bagels and croissants is

The less time that elapses, the

When there are more substitutes for a product, the ________ for the product is ________.

Price and total revenue move in inverse directions when demand is